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Oil Drops as US Lifts Sanctions on Iranian Oil Officials

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Oil Importers

By Adedapo Adesanya

After the United States removed some Iranian oil officials from its list of designated persons’ subject to sanctions, oil prices dropped on Thursday amid renewed demand prospects.

Brent crude pulled back to $72.00 per barrel, falling 52 cents or 0.72 per cent while the West Texas Intermediate (WTI) crude settled at $69.76 per barrel, dropping 53 cents or 0.75 per cent.

The US Department of the Treasury said on Thursday it was removing several Iranian officials from its list of designated persons, including three directors of the National Iranian Oil Company (NIOC).

This served as a change of tone after its Secretary of State, Mr Antony Blinken, said earlier this week that hundreds of US sanctions will remain on Iran even if the United States rejoins a nuclear accord.

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President Joe Biden’s administration has been engaged in indirect talks with Iran about reversing former President Donald Trump’s exit from the 2015 nuclear accord, formally known as the Joint Comprehensive Plan of Action (JCPOA).

However, a US official reportedly said that the activity was routine and not related to talks with Iran over reviving the 2015 deal to restrict its nuclear weapons development.

Yet, oil prices still went south since the market still believes that Iran could provide about 1 million to 2 million barrels per day in additional oil supply if a deal is struck and sanctions lifted.

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They are, however, expected to return to the bullish territory soon as the market digest the latest Organisation of the Petroleum Exporting Countries (OPEC) oil demand forecast.

OPEC reiterated its forecast yesterday that global oil demand would jump in the second half of this year.

Global oil demand will rise by 6 million barrels per day this year, led by strong consumption in China and the United States, especially in the second half of 2021 with growing economies and border re-openings, OPEC said on Thursday 2021 demand forecast unchanged from last month.

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Before OPEC’s monthly report was published, prices were lower as the market was still digesting the inventory draw in the United States for the week to June 4.

On Wednesday, the Energy Information Administration (EIA) reported a 5.2 million-barrel fall in domestic crude inventories for the week.

Optimism for strong economic demand after new US unemployment claims fell to their lowest since the country’s first wave of COVID-19 last year is also expected to help the market.

Consumer prices in the world’s largest economy also increased solidly in May as the pandemic’s grip on the economy continues to ease.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Economy

Profit Takers Drag ASI to 37,847.07 Points, Market Cap to N19.725trn

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By Dipo Olowookere

The All-Share Index (ASI) of the Nigerian Exchange (NGX) Limited depreciated by 1.81 per cent or 698.23 points on Tuesday to finish at 37,847.07 points as against 38,545.30 points it ended a day earlier.

This was majorly caused by the actions of profit takers, who pounced on the market to offload some stocks that have gained in the past few trading sessions.

This also affected the market capitalisation of the stock exchange, which reduced by N364 billion to finish at N19.725 trillion compared with N20.089 trillion it ended on Monday.

Business Post reports that the market breadth closed negative yesterday with 17 price gainers and 23 price losers led by Airtel Africa, which lost 10.00 per cent to close at N678.00.

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Mutual Benefits Assurance went down by 7.32 per cent to trade at 38 kobo, Cornerstone Insurance declined by 7.27 per cent to 51 kobo, Learn Africa depreciated by 648 per cent to N1.01, while Ikeja Hotel fell by 6.19 per cent to 91 kobo.

On the other side, Fidson shook off the bad performance of Monday to close as the best-performing stock by rising by 10.00 per cent to N5.06.

Vitafoam gained 9.68 per cent to trade at N13.60, Red Star Express appreciated by 9.55 per cent to N3.67, Veritas Kapital improved by 9.09 per cent to 24 kobo, while Courtville gained 5.00 per cent to quote at 21 kobo.

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The most traded stock of the day was Transcorp as it sold 42.4 million shares valued at N37.2 million. Vitafoam traded 20.1 million equities worth N271.6 million, Dangote Sugar exchanged 17.6 million stocks for N312.1 million, FBN Holdings sold 12.4 million equities valued at N88.5 million, while Access Bank traded 11.5 million shares for N98.4 million.

At the close of business, investors traded a total of 218.3 million stocks worth N2.7 billion in 3,524 deals compared with the 209.2 million equities worth N1.8 billion transacted in 3,390 deals on Monday, indicating increases in the trading volume by 4.33 per cent, trading value by 54.59 per cent and the number of deals by 3.95 per cent.

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In terms of the performance of the sectors yesterday, the energy and consumer goods sectors appreciated by 0.05 per cent and 002 per cent respectively, while the industrial goods, insurance and banking counters depreciated by 1.13 per cent, 0.39 per cent and 0.07 per cent apiece.

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Economy

Local Currency Gains N1.67 Against Dollar at I&E

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By Adedapo Adesanya

The Naira strengthened against the US Dollar at the Investors and Exporters (I&E) window of the foreign exchange market on Tuesday.

Business Post reports that during the session, the local currency appreciated by N1.67 or 0.4 per cent to close the session at N410/$1 in contrast to the previous session’s N410.67/$1.

It was observed that the domestic gained this strength despite coming under a significant FX demand pressure at the market segment.

Yesterday, the I&E recorded a turnover of $169.07 million, 79.5 per cent or $74.9 million higher than the $94.17 million recorded on Monday.

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At the parallel market, the value of the Naira paired with the American Dollar remained unchanged yesterday at N500/$1.

But against the Pound Sterling, the domestic depreciated by N3 at the black market to sell for N713/£1 compared with N710/£1 it traded a day earlier.

Also, the Naira lost N3 against the Euro at the unregulated segment of the market to trade at N595/€1 in contrast to N592/£1 of the earlier day.

At the interbank segment of the market, the Nigerian currency appreciated against the American currency by one kobo to quote at N410.19/$1 versus N410.20/$1 it traded on Monday.

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Cryptos Languish in Bearish Territory 

Five of the seven cryptocurrencies tracked by Business Post on Tuesday were in bearish territory amid a growing crackdown on the virtual asset in China.

In the Asian country, authorities in the southwest province of Sichuan recently ordered bitcoin mining projects to close.

The State Council, China’s cabinet, last month vowed to clamp down on mining and trading as part of a series of measures to control financial risks.

The world’s biggest cryptocurrency, Bitcoin (BTC) has lost over 20 per cent in the last six days alone and has shed half of the value it traded in April.

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Yesterday, it dropped 0.8 per cent to trade at N16,474,637.69, Ethereum (ETH) lost 14.1 per cent to sell at N901,355.08, Ripple (XRP) dipped by 6.5 per cent to trade at N305.00, Litecoin (LTC) declined by 1.1 per cent to trade at N63,800.00, while Tron (TRX) depreciated by 19.6 per cent to sell at N25.60.

But the Dash (DASH) appreciated by 4.4 per cent to trade at N70,000.00, while the US Dollar Tether (USDT) gained 0.8 per cent to sell for N516.86.

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Economy

Oil Falls as OPEC+ Mulls Raising Supply

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By Adedapo Adesanya

Crude oil prices settled slightly lower on Tuesday as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) discussed raising oil production.

Earlier in the day, the price of the Brent crude hit a two-year high of $75 per barrel but it later dropped to $74.85 per barrel, losing 23 cents or 0.18 per cent while the West Texas Intermediate (WTI) declined by 0.29 per cent or 58 cents to trade at $73.08 per barrel.

OPEC+ is discussing a gradual increase in oil output from August, but no decision has been taken on the exact volumes, an OPEC+ source reportedly said on Tuesday, according to Reuters.

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The alliance is already returning 2.1 million barrels per day (bpd) to the market from May through July as part of a plan to unwind last year’s record output curbs gradually as pandemic-hit demand recovers.

The group will have its next meeting on July 1.

Both benchmarks have risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel. The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.

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On Monday, the market reacted positively over a pause in negotiations to revive the Iran nuclear deal after Mr Ebrahim Raisi won the country’s presidential election.

Although he backed talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected meeting US President, Mr Joe Biden, even if the country removed all sanctions placed by the Donald Trump administration.

Removal of sanctions on commodities, including crude, could see an extra one million barrel flow into the market as it would be exempted from supply quotas.

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Meanwhile, forecasters continue to see a higher oil price amid tighter oil supply and recovering demand which could push oil briefly to $100 per barrel in 2022.

US crude stocks were expected to have dropped for a fifth consecutive week, and this could lift prices.

The Energy Information Administration (EIA) said last week that US crude oil stockpiles dropped sharply in the week to June 11 as refineries boosted operations to their highest since January 2020, signalling a continued improvement in demand.

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